Quotation Behaviour of Profit Centres for Offers on Dynamic Logistic Services

Abstract

Today, freight forwarders are required to provide a global transport network, while at the same time keeping close proximity to their customers. A common way to deal with those opposite goals is to create geographically specialised business units, working together under the umbrella of a holding. Advantages of this structure are superb knowledge of the regional markets, while being able to provide international transport services under one name through cooperation of the units. Although part of the same corporate group, the regional business units operate generally independently from each other as individual profit centres. In this paper, the provision of dynamic logistic services through cooperation of profit centres is described. The ability to prepare competitive bids for international transports is essential for the success of a freight forwarder. The main objective of this paper is therefore to create a model of the decision processes in profit centre quotations. Decision processes of the involved business units in relation to their quotes are modelled in a simplified role gaming approach. Application of strategies derived from Poker gaming, especially the collection of a forced bet from the involved units, is tested as a method to govern the corporate offer calculation towards successful bids, aligning the self-interests of the individual profit centres with the objectives of the corporate group. The results are discussed for their applicability in a real company environment. Further research requirements are identified.